2012 Legislative Update: Week 6 (2/7 – 2/10)

Health Care – The Governor surprised a few folks early last week by acquiescing to a couple of fundamental changes to pending legislation concerning health care insurance exchanges (the future vehicle for purchasing private health insurance). Under new Federal health care law, states must set the ground rules for an exchange prior to 2014. Originally, the Administration had recommended that Vermont’s exchange not include the more Spartan bronze plan and require businesses with less than 100 employees to purchase their insurance through the exchange. Both of these provisions were aggressively opposed by many in the business community and the Governor, apparently heeding their cautionary calls for restraint, changed course by indicating he could now accept the bronze option and limit the exchange mandate to employers with less than 50 employees. The Vermont Chamber of Commerce and others had thought that the bronze plan was a crucial must-have ingredient for many businesses to continue their high deductible, Health Savings Account-based plans. The Chamber also felt that mandating employers in the 50 – 100 employee range to participate in the exchange would severely limit insurance procurement options for this group of businesses. The House Health Care Committee hopes to wrap up work on the exchange bill (H. 559) within the next couple of weeks.

State Property Tax – Every year the Legislature sets the base education rate for residential property and the uniform education tax rate for nonresidential property. If the General Assembly failed to take this type of action, the rates would revert to the rate structure prescribed by statute; $1.10 residential and $1.59 non-residential. This past Friday (2/10), the House approved FY 13 rates of $.88 for residential property and $1.37 for nonresidential. These proposed new rates entail one cent increases over current tax rates, inching northward due a 1.6% reduction in the state’s education grand list and a projected increase in school spending statewide (after three years of holding the line). Once again, the issue of restoring last year’s general fund cut to education became the topic of floor debate under this bill. An amendment seeking to earmark half of future general fund surpluses to the education fund was approved by a vote of 140-0. This provision was previously approved by the House as part of this year’s Budget Adjustment Act, but was stripped from the final bill by the Senate. This is a case of – if at first you don’t succeed …. It looks like this will set the stage for round 2 of this dispute, with the House on one side and the Senate and the Governor on the other. A second amendment, calling for the restoration of the general fund contribution in one fell swoop in FY 13, fell short by a vote of 94-48 (Wilson voting with the majority). This proposal failed to muster a majority largely because it would create a $27.5 million hole in the general fund that no one could quite figure out how to fill. This bill now moves on to the Senate for consideration.